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Q2 2027 Investor Presentation November 3 , 2026
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Legal Disclaimer This presentation consists of these slides and the associated remarks and comments, which are related and intended to be pres ent ed and understood together. Please refer to the appendix of these slides for definitions of certain terms. Cautionary Language Concerning Forward - Looking Statements This presentation includes certain “forward - looking statements” within the meaning of the Private Securities Litigation Reform A ct of 1995 including statements regarding industry trends related to AI and observability, the expected and current benefits that we believe organizations receive from using the Dynatrace platform, the expected benefits of the Arize acquisit ion , capabilities expected to be available to organizations from using Dynatrace and Arize, Dynatrace’s plans to integrate Arize into the Dynatrace platform, the expected benefits of the company's partnership with CrowdStrike, the company's new sha re repurchase program, the company's plans to hold an Investor Day that outlines, among other things, its path to becoming a "Rule of 50" company in fiscal 2029, our future growth prospects, and our financial and business outlook, includin g o ur financial guidance for the full year and third quarter of fiscal 2027. These forward - looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this presentation that are n ot historical facts and statements identified by words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning. These forward - looking statements reflect our current views about our plans, in tentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward - looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those describ ed in the forward - looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, our ability to maintain our revenue growth rates in future periods; overall demand for and mar ket adoption of our solutions; our ability to compete; our ability to innovate and develop and effectively market solutions that meet customer needs, including with AI capabilities and functionalities; our ability to acquire new customers and retain and exp and our relationships with existing customers; our ability to expand our sales and marketing capabilities; our ability to maintain successful relationships with partners; the ability of our platform and solutions to effectively interoperate with c ust omers’ IT infrastructures; our ability to hire and retain necessary qualified employees to grow our business and expand our operations; our ability to successfully complete acquisitions and integrate newly acquired businesses and offerings; our use of new and evolving technologies, including AI, in our offerings and business; security breaches, computer malware, computer hacking attacks, and other security incidents or compromises; real or perceived errors, failures, defects, or vulner abi lities in our solutions; our ability to protect and enforce our proprietary technology and intellectual property rights; the effect on our business of uncertainty in the U.S. and global economies, along with uncertain geopolitical conditions; and oth er risks set forth under the caption “Risk Factors” in our most recent Annual Report on Form 10 - K, subsequent Quarterly Reports on Form 10 - Q, and our other SEC filings. We assume no obligation to update any forward - looking statements contained in t his document as a result of new information, future events or otherwise. Non - GAAP Financial Measures In addition to disclosing financial measures prepared in accordance with GAAP, this presentation contains certain non - GAAP finan cial measures as defined by Regulation G, including non - GAAP income from operations, non - GAAP operating margin, non - GAAP net income, non - GAAP net income per diluted share, adjusted free cash flow (adjusted FCF), adjusted FCF margin, pre - tax adjusted FCF, and pre - tax adjusted FCF margin. We also use or discuss non - GAAP financial measures in earnings releases, conference calls, other slide presentations and webcasts. We use these non - GAAP financial measures for financial and o perational decision - making purposes, and as a means to evaluate period - to - period comparisons and liquidity. We believe that these non - GAAP financial measures provide useful information about our operating results, enhance the overall under standing of past financial performance and allow for greater transparency with respect to metrics used by our management in its financial and operational decision - making. The presentation of the non - GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Our non - GAAP financial measures may not provide information that is directly comparable to similarly title d metrics provided by other companies. Non - GAAP financial measures are defined in our press release dated November 3, 2026 and in this presentation and the tables included in that press release and this presentation include reconci lia tions of historical non - GAAP financial measures to their most directly comparable GAAP measures. Please also see the Data Trends Table on the Investor Relations page of our website. Dynatrace presents constant currency (CC) amounts for Annual Recurring Revenue (ARR), Total Revenue and Subscription Revenue to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. In this presentation, YoY (year over year) compares our financial performance to the applicable period in the previous fiscal ye ar. Dynatrace and the Dynatrace logo are trademarks of the Dynatrace, Inc. group of companies. All other trademarks are the prope rty of their respective owners. © 2026 Dynatrace LLC. 2
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Enterprises are facing unprecedented challenges Explosion of complexity Tool fragmentation Struggle to trust AI and realize value 3
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Unprecedented challenges demand a differentiated approach Eliminate data blind spots Unified telemetry for instant answers Ground decisions in precise context Real - time mapping across dependencies Get answers, not guesses Deterministic intelligence with autonomous action CONTEXT INTELLIGENCE UNIFIED DATA 4
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Transform complexity into powerful business assets. The AI - powered observability platform 5
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2026 20+ years of groundbreaking innovation & milestones 2025 2024 2023 2022 2019 2014 2011 2005 Founded in Linz, Austria AppMon pioneers APM market Dynatrace acquired by Compuware and merged with Gomez Pioneers industry’s first causal and predictive AI engine, Davis AI® SaaS platform introducedse Dynatrace IPO Sales reach $400M Grail data lakehouse introduced Sales reach $1B Cloud Automation added to platform (2021) Davis CoPilot launched, adding generative AI capabilities Expands to Application Security market Kubernetes Security Posture Management solution launched A Leader in the Gartner® Magic Quadrant for Digital Experience Monitoring Security Analytics expands security offering Observability for Developers introduced Gartner, Magic Quadrant for Observability Platforms, Padraig Byrne, Martin Caren, D.B. Cummings, Neil Young, 13 July 2026. Gartner, Magic Quadrant for Digital Experience Monitoring, Padraig Byrne, Matt Crossley, DB Cummings, Martin Caren, Pankaj Pr asa d, 21 October 2024. Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology use rs to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the o pin ions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expre sse d or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally. MA GIC QUADRANT is a registered trademarks of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights re se rved. The Gartner content described herein (the “Gartner Content”) represents research opinion or viewpoints published, as part of a s yndicated subscription service, by Gartner, Inc. (“Gartner”), and is not a representation of fact. Gartner Content speaks as of its original publication date, and opinions expressed in the Gartner Content are subject to change without notice. A Leader in Gartner® Magic Quadrant for Observability Platforms for 16 consecutive years Announced new AI - powered Log Analytics capabilities AI Observability for Large Language Models and Generative AI launched AutomationEngine and AppEngine added to platform Introduces the industry’s first agentic operations system, Dynatrace Intelligence Log management & analytics reaches $200 million of annualized consumption Surpasses $2B ARR Deepened strategic collaboration with ServiceNow to advance autonomous IT Operations 6 Acquired Arize to help customers gain visibility and control across the AI lifecycle
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Platform evolution to support autonomous operations A nswer driven automation Dynatrace 2023+ Dynatrace 2014+ Answers, not just data Dynatrace 2006+ D ata collection Issues are deeply understood after they occur Issues are auto - diagnosed when they occur Issues are anticipated before they occur Issues are resolved before they matter THE LEADER THE INNOVATOR THE PIONEER TODAY Dynatrace 2026+ Autonomous intelligence Preventive operations Automated root - cause Reactive operations Autonomous operations 7
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Real - time dependency graph Smartscape Agentic operations system Dynatrace Intelligence Unified data lakehouse Grail THE DYNATRACE PLATFORM Groundbreaking technologies at the core 8
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Operate on determinism and facts Topology Traces Metrics Logs Behavior Metadata Code Network Threats Vulnerabilities Business events LLMs Smartscape Grail Dynatrace Intelligence DETERMINISTIC AGENTS: Root Cause Agent Analytics Agent Forecasting Agent Operator Agent Autonomous SRE Agent Cloud SRE Agent Development & ITOps teams Cloud & AI native teams Business teams 3 rd party agents UNIFIED DATA CONTEXT INTELLIGENCE ANSWERS 9
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AI SOFTWARE DELIVERY LIFECYCLE Am I shipping the right AI capabilities safely and improving continuously? Dynatrace + Arize: delivering t he most comprehensive offering Spanning pre - production to production BUSINESS IMPACT AND APPLICATION EXPERIENCE Is my AI investment paying off and are users getting value? AI AGENTS AND WORKFLOWS Are my agents completing tasks and behaving safely? LLM AND RAG QUALITY Are my AI outputs accurate, safe, and cost - effective? MODEL OPERATIONS Is my model being served efficiently and within SLO? DATA AND RETRIEVAL Is my data pipeline reliably serving my AI with the right context? CLOUD AND INFRASTRUCTURE OPERATIONS Is my AI infrastructure performing and keeping pace with inference demand? 10
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Considered a leader in the cloud observability market since 2005 11 Named a Leader in the 2026 Gartner ® Magic Quadrant for Observability Platforms. This is the 16th consecutive year that Gartner has named Dynatrace a Leader in this report. 1 Dynatrace named a Leader in The Forrester Wave : AIOps Platforms, Q4 2026 report. 2 Recognized as a Leader in both the Cloud - Native Observability and Cloud - Native Security quadrants in the 2025 ISG Provider Lens Multi Public Cloud Solutions report. 1. Gartner, Magic Quadrant for Observability Platforms, Padraig Byrne, Martin Caren, D.B. Cummings, Neil Young, 13 July 2026 . Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications co nsi st of the opinions of Gartner’s Business & Technology insights organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warr ant ies of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartn er, Inc. and/or its affiliates and are used herein with permission. All rights reserved. 2. Forrester does not endorse any company, product, brand, or service included in its research publications and does not advise any person to select the products or services of any company or brand based on the ratings included in such publications. Information is based on the best available resources. Opinions reflect judgment at the time and are subject to cha nge. This report is part of a broader collection of Forrester resources, including interactive models, frameworks, tools, data, and access to analyst guidance. For more information, read about Forrester’s objectivity here: https://www.forrester.com/about - us/objectivity/ Dynatrace named a Leader and Outperformer in 2026 GigaOm Radar for Kubernetes Observability.
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American Airlines Transforms Observability and Accelerates Delivery with Dynatrace Different buckets of logs from a legacy solution all consolidated onto Grail reduction in mean time to detect by leveraging Dynatrace causal AI to determine root cause 43 50% 12 Dynatrace impact: “Dynatrace helped us to bring our new AI travel tool to market much faster because it gives our internal stakeholders a single source of truth they can use to evaluate the decisions they make and move forward with confidence.” 12
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A rapidly expanding total addressable market 13 A p p l i c a t i o n S e c u r i t y Log Management Infrastructure Monitoring Application Performance Monitoring $92B TAM Core Observability: $64B Application Security: $18B AI & LLM Observability: $10B A I a n d L L M O b s e r v a b i l i t y Based on internal estimates and third - party research.
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Expansive go - to - market to capture global 15,000 customers 14 Comprehensive partner channels Global System Integrators (GSIs), Hyperscaler and Technology Alliance Partners, Regional resellers and solution partners Global go - to - market reach 35+ countries across NORAM, EMEA, APAC, and LATAM STRATEGIC ENTERPRISE COMMERCIAL
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Frictionless upsell Consumption based Simple contract Full platform access Dynatrace Platform Subscription (DPS) 15 Flexible and scalable pricing model suited for the enterprise
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Large and expanding TAM Continuous innovation and platform evolution Differentiated AI - powered observability platform Powerful combination of growth and profitability at scale Flexible, customer - friendly pricing model driving consumption Proven and scalable go - to - market model Building blocks in place for continued success 16
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Q2 FY 2027 Financial Results
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Financial results as of November 3rd , 2026. 1. See the Appendix for definitions. 2. Denotes growth when adjusted for constant currency exchange rates. See the Appendix for definition. 3. Operating margin and pre - tax adjusted FCF margin are non - GAAP financial measures. See the Appendix for reconciliations of GAAP t o non - GAAP financial measures. $2.21B Annual Recurring Revenue 1 95% Q2 - 27 Subscription Revenue Mix Mid - 90s % Gross Retention Rate 1 29% TTM Q2 - 27 Non - GAAP Operating Margin 1,3 16% ARR Growth YoY 2 17% Q2 - 27 Subscription Revenue Growth YoY 2 109% Net Retention Rate 1 33% TTM Q2 - 27 Pre - tax Adjusted FCF Margin 1,3 Dynatrace financials at a glance 18
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Total ARR growth 19 QUARTERLY TOTAL ARR ($M) 1 $1,647 $1,734 $1,822 $1,899 $1,972 $2,054 $2,136 $2,207 Q3-25 Q4-25 Q1-26 Q2-26 Q3-26 Q4-26 Q1-27 Q2-27 1. Quarterly Total ARR amounts shown in bar graphs are ‘As Reported’ metrics. 2. Constant currency growth rates reflect YoY growth when using exchange rates from the same period in the prior year. See the A ppe ndix for definitions. As Reported YoY Growth % Constant Currency YoY Growth % 2 1 8% 17% 16% 15% 18% 17% 20 % 16 % 17 % 18% 17% 16% 16% 16 % 16% 16 %
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QUARTERLY & LAST TWELVE MONTHS (LTM) NET NEW ARR @ CC ($M) 1 Net New ARR growth 20 $70 $75 $81 $70 $263 $270 $277 Q2 FY26 Q3 FY26 Q4 FY26 Q1 FY27 Q2 FY27 1. Net New ARR amounts shown in bar graphs represent Total Net New ARR at Constant C urrency . See the Appendix for definition. 2. Defined as quarterly increase in Net N ew ARR in Constant C urrency compared to the year - ago quarter Net N ew ARR in Constant C urrency . 3. Represent organic growth, excluding $13 million dollars of contribution from Bindplane acquisition. Constant Currency YoY Growth % 2 Quarterly Y/Y Growth LTM Y/Y Growth 1% 5% 12% 23% / 17% 3 16% 11% 9% 66% / 41% 3 $298 $311 $73 $85 $311 $298 0% 18% / 13% 3
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Subscription & Total Revenue growth 21 $417 $424 $458 $473 $493 $506 $530 $553 $436 $445 $477 $494 $515 $532 $555 $580 Q3-25 Q4-25 Q1-26 Q2-26 Q3-26 Q4-26 Q1-27 Q2-27 QUARTERLY REVENUE ($M) Total Revenue 1 Subscription Revenue 1. Total Revenue includes Subscription and Services R evenue . 2. Constant currency growth rates reflect YoY growth when using exchange rates from the same period in the prior year. See Appen dix for definition. 17 % 16 % 16 % 1 5 % 20% 19 % 19% 17 % 16 % 16 % 15 % 21 % 20% 1 9% Subscription Revenue Constant Currency YoY Growth 2 Total Revenue Constant Currency YoY Growth 2 17% 17 %
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Efficient model with best - in - class gross margins 1 22 81% 82% 81% 86% 85% 85% 4% 5% 12% FY25 FY26 Q2-27 TTM GAAP GROSS PROFIT MARGIN Total GM Subscription GM Services GM 84% 84% 83% 87% 87% 86% 18% 19% 24% FY25 FY26 Q2-27 TTM NON - GAAP GROSS PROFIT MARGIN 2 Total GM Subscription GM Services GM 1. Our reference to “best - in - class” is in relation to other public companies that focus on observability. 2. These are non - GAAP financial measures. See the Appendix for reconciliations of GAAP to non - GAAP financial measures.
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FY25 FY26 Q2-27 TTM Highly efficient operating model $938 $1,102 $1,176 FY25 FY26 Q2-27 TTM NON - GAAP OPEX $’S & AS % OF REVENUE ($M) 1 17% 18% 30 % 29 % 7% 7% GAAP OPEX $’S & AS % OF REVENUE ($M) R&D G&A S&M 23 % 24 % 34 % 33% 11 % 11 % Other OPEX 2 1 % 1% $1,199 $ 1,401 23% 36% 11% 1 % 16% 31% 8% 1. These are non - GAAP financial measures. See the Appendix for reconciliations of GAAP to non - GAAP financial measures. 2. Other OpEx includes amortization of intangibles and impairment of long - lived assets. 23 R&D G&A S&M $ 1,491
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FY27 guidance summary Based on information available as of November 3 rd , 2026, Dynatrace is issuing guidance for the third quarter and updating its prior guidance for full year fiscal 2027 in the ta bl es below. This guidance reflects the expected contribution from the Arize acquisition, including approximately 200 basis points ARR growth accretion and 175 basis points o f d ilution to non - GAAP operating margin for fiscal 2027. This guidance is based on the average foreign exchange rates for the month of October 30, 2026. We expect foreign exchange to be a headwind of approximately $ 20 million on ARR and approximately $6 million on revenue for fiscal 2027 compared to ARR and revenue at constant currency. This represents an incremental headwind of approxim ate ly $6 million to ARR and $ 2 million to revenue compared to our prior guidance. This guidance also excludes the impact of any share repurchases after September 30, 2026. Growth rates for ARR, Total revenue, and Su bscription revenue are presented in constant currency to provide better visibility into the underlying growth of the business. 24 All growth rates are compared to the third quarter and full year of fiscal 2026. Reconciliations of non - GAAP income from operations, non - GAAP net income, non - GAAP net income per diluted share and adjusted free cash flow guidance to the most directly comparable GAAP measures are not available without unreasonable efforts on a forward - looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non - GAAP measures; in particular, the measures and effects of share - based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs, as well as unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results. *For additional information, please see the appendix for definition. **Guidance change at midpoint is rounded to the nearest million. (in millions, except per share data) Current FY 2027 Guidance Prior FY 2027 Guidance Guidance Change at Midpoint** Arize ( in millions, except per share data) Q3 Fiscal 2027 Guidance Arize ARR $2,393 - $2,413 $2,359 - $2,379 $34 $40 Total revenue $591 - $596 $7 As reported 16.5% - 17.5% 15% - 16% 150 bps 200 bps As reported 15% - 16% 130 bps Constant currency 17.5% - 18.5% 15.5% - 16.5% 200 bps 200 bps Constant currency 15.5% - 16.5% 130 bps Total revenue $2,330 - $2,340 $2,306 - $2,320 $22 $16 Subscription revenue $567 - $572 $7 As reported 15.5% - 16% 14% - 15% 125 bps 80 bps As reported 15% - 16% 140 bps Constant currency 16% 14.5% - 15% 125 bps 80 bps Constant currency 15.5% - 16.5% 140 bps Subscription revenue $2,227 - $2,237 $2,206 - $2,220 $19 $16 Non - GAAP income from operations $152 - $157 $(19) As reported 15.5% - 16% 14% - 15% 125 bps 80 bps Non - GAAP Operating Margin 26% (350) bps Constant currency 16% 14.5% - 15% 125 bps 80 bps Non - GAAP net income $136 - $141 Non - GAAP income from operations $653 - $661 $682 - $690 $(29) ($36) Non - GAAP net income per diluted share $0.44 - $0.45 Non - GAAP Operating Margin 28% - 28.25% 29.5% - 29.75% (150) bps (175) bps Diluted weighted average shares outstanding 313 - 314 Non - GAAP net income $576 - $584 $581 - $591 $(6) Non - GAAP net income per diluted share $1.88 - $1.90 $1.97 - $1.99 $(0.09) Diluted weighted average shares outstanding 306 – 308 295 – 297 11 Adjusted free cash flow* $600 - $605 $610 - $615 $(10) ($18) Adjusted free cash flow margin* 26% 26.5% (50) bps (100) bps
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$2,359 - $2,379 $2,393 - $2,413 $40 Prior ARR Guidance (as reported $) Currency Impact Arize Updated ARR Guidance (as reported $) Updated FY27 ARR guidance vs. Prior 1 25 $(6 ) 15.5% - 16.5 % 2 200bps Raise to Guidance at Midpoint (CC) 1. Values have been rounded and may not add up precisely to the totals. 2. Represents year - over - year growth rates in constant currency. See the Appendix for definition. 17.5% - 18.5 % 2
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$2,206 - $2,220 $2,227 - $2,237 $(2) $16 $5 Prior Subs. Revenue Guidance (as reported $) Currency Impact Arize Dynatrace Change at Midpoint Updated Subs. Revenue Guidance (as reported $) $2,306 - $2,320 $2,330 - $2,340 $(2) $16 $8 Prior Revenue Guidance (as reported $) Currency Impact Arize Dynatrace Change at Midpoint Updated Revenue Guidance (as reported $) 125bps Raise to Guidance at Midpoint (CC) Updated FY27 Revenue & Subscription Revenue guidance vs. Prior 1 26 14.5 - 15 % 2 Total Revenue Subscription Revenue 1. Values have been rounded and may not add up precisely to the totals. 2. Represents year - over - year growth rates in constant currency. See the Appendix for definition. 16 % 2 125bps Raise to Guidance at Midpoint (CC) 14.5 - 15 % 2 16 % 2
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$610 - $615 $600 - $605 $8 $(18) Prior Adj. FCF Guidance (as reported $) Arize Dynatrace Impact at Midpoint Updated Adj. FCF Guidance (as reported $) $682 - $690 $653 - $661 $7 $(36) Prior NG Op Income Guidance Arize Dynatrace Change at Midpoint Updated NG Op Income Guidance Updated FY27 Non - GAAP Income from Operations & Adjusted Free Cash Flow Guidance & vs. Prior 1 27 1. These are non - GAAP financial measures. See the Appendix for definitions of non - GAAP financial measures. 2. Values have been rounded and may not add up precisely to the totals. 3. As reported dollars and percent of revenue. Non - GAAP Income from Operations 2,3 (150)bps Reduction to Guidance at Midpoint Adjusted Free Cash Flow 2,3 ( 50)bps Reduction to Guidance at Midpoint 29.5% - 29.75% 28% - 28.25% 26.5% 26%
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Definitions & Non - GAAP Reconciliations
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1) Annual Recurring Revenue (ARR) is defined as the daily revenue of all subscription agreements that are actively generating revenue as of the last day of the reporting period multiplied by 365. We exclude from our calculation of Total ARR any revenues derived from month - to - month agreem ents and/or product usage overage billings. 2) Constant Currency (CC) amounts for ARR, Total Revenue and Subscription Revenue are presented to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign exchange rate fluctuations. To present this information, current and com par ative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exc hange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the co rre sponding period in the last fiscal year. 3) Dollar - Based Gross Retention Rate is defined as the ARR from all customers as of one year prior, less contraction and customer churn, divided by the total ARR from one year prior. This metric reflects the percentage of ARR from all customers as of the year prior that has been retaine d. 4) Dollar - Based Net Retention Rate is defined as the ARR at the end of a reporting period for the cohort of Dynatrace accounts as of one year prior to the date of calculation, divided by the ARR one year prior to the date of calculation for that same cohort. Our dollar - based net retention r ate reflects customer renewals, expansion, contraction and churn. Dollar - based net retention rate is presented on a constant currency basis. 5) Dynatrace Customers are defined as accounts, as identified by a unique account identifier, that generate at least $10,000 of Dynatrace ARR as of th e reporting date. In infrequent cases, a single large organization may comprise multiple customer accounts when there are distinct divisi ons , departments or subsidiaries that operate and make purchasing decisions independently from the parent organization. In cases where multiple customer accou nts exist under a single organization, each customer account is counted separately based on a mutually exclusive accounting of ARR. 6) Adjusted Free Cash Flow ("Adjusted FCF") is defined as the net cash provided by or used in operating activities less capital expenditures, reflected as purchase of property and equipment and capitalized software additions in our financial statements, plus cash paid for acquisition - related, r estructuring, and other non - recurring and unusual items. The related margin is adjusted free cash flow expressed as a percentage of total revenue. 7) Pre - Tax Adjusted Free Cash Flow is defined as adjusted free cash flow excluding the impact of cash paid for or received from taxes. The related margin is pre - tax adjusted free cash flow expressed as a percentage of total revenue. Appendix - Definitions 29
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ARR expansion trends 1 30 1. Values have been rounded and may not add up precisely to the totals. 2. Year - over - year FX headwind/(tailwind) using exchange rates from the same quarter in the prior fiscal year. 3. Represents the year - over - year growth rate excluding the FX headwind/(tailwind). 4. Defined as the quarterly increase/(decrease) in the current quarter As R eported ARR compared to the previous quarters As R eported ARR. 5. Quarterly FX impact using exchange rates from the prior quarter. 6. Defined as Net New ARR (as reported) adjusted for quarterly FX impact. 7. Defined as quarterly increase in Net N ew ARR in Constant C urrency compared to the year - ago quarter Net N ew ARR in Constant C urrency . FY27 FY25 FY26 ($ in millions) Q1 - 25 Q2 - 25 Q3 - 25 Q4 - 25 Q1 - 26 Q2 - 26 Q3 - 26 Q4 - 26 Q1 - 27 Q2 - 27 Year - over - Year ARR (As Reported) $1,541 $1,617 $1,647 $1,734 $1,822 $1,899 $1,972 $2,054 $2,136 $2,207 Year - over - Year increase 19% 20% 16% 15% 18% 17% 20% 18% 17% 16% TTM FX headwind/(tailwind) 2 12 (14) 37 19 (28) (19) (57) (46) (4) 3 ARR - Constant Currency 1,553 1,603 1,684 1,753 1,795 1,880 1,915 2,008 2,132 2,210 Year - over - Year ARR Increase - Constant Currency 3 20% 19% 18% 17% 16% 16% 16% 16% 17% 16% Q1 - 25 Q2 - 25 Q3 - 25 Q4 - 25 Q1 - 26 Q2 - 26 Q3 - 26 Q4 - 26 Q1 - 27 Q2 - 27 Q2 - 27 TTM Quarter - over - Quarter ARR (As Reported) $1,541 $1,617 $1,647 $1,734 $1,822 $1,899 $1,972 $2,054 $2,136 $2,207 Net New ARR (As Reported) 4 37 76 31 87 88 77 73 81 82 71 308 Quarterly FX headwind/(tailwind) 5 9 (15) 37 (13) (37) (7) 2 (1) 3 (1) 3 Net New ARR - Constant Currency 6 46 61 68 74 51 70 75 81 85 70 311 Year - over - Year Net New ARR Growth – Constant Currency 7 23% 3% - 3% - 12% 13% 16% 11% 9% 66% - % 18%
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Non - GAAP subscription and services gross margin reconciliation 1 31 1. Values have been rounded and may not add up precisely to the totals . FY26 Q2 - 27 TTM ($ in millions) GAAP Share - Based Comp. Employer Payroll Tax on Employee Stock trans. Amort. of Intangibles Acquisition - related, Restructuring & Other Non - GAAP GAAP Share - Based Comp. Employer Payroll Tax on Employee Stock trans. Amort. of Intangibles Acquisition - related, Restructuring & Other Non - GAAP Subscription Cost of Revenue 285 (29) (2) - (1) 253 320 (29) (1) - (1) 288 Subscription Gross Profit $1,645 $29 $2 - $1 $1,677 $1,763 $29 $1 - $1 $1,795 Subscription Gross Margin 85% 87% 85% 86% Services Cost of Revenue 84 (12) (1) - - 72 87 (11) (1) - - 75 Services Gross Profit $5 $12 $1 - - $17 $12 $11 $1 - - $24 Services Gross Margin 5% 19% 12% 24%
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32 1. Values have been rounded and may not add up precisely to the totals. Non - GAAP subscription and services gross margin reconciliation 1 FY25 ($ in millions) GAAP Share - Based Comp. Employer Payroll Tax on Employee Stock trans. Amort of Intangibles Acquisition - related, Restructuring & Other Non - GAAP Subscription Cost of Revenue 233 (27) (2) - - 205 Subscription Gross Profit $1,389 $27 $2 - - $1,418 Subscription Gross Margin 86% 87% Services Cost of Revenue 74 (10) (1) - - 63 Services Gross Profit $3 $10 $1 - - $13 Services Gross Margin 4% 18%
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Non - GAAP income from operations reconciliation 1 33 1. Values have been rounded and may not add up precisely to the totals. FY26 Q2 - 27 TTM ($ in millions) GAAP Stock - Based Comp. Employer Payroll Tax on Employee Stock trans. Amort. of Intangibles Acquisition - related, Restructuring & Other Non - GAAP GAAP Stock - Based Comp. Employer Payroll Tax on Employee Stock trans. Amort. of Intangibles Acquisition - related, Restructuring & Other Non - GAAP Cost of Revenues 372 (40) (2) (3) (1) 325 413 (40) (2) (6) (1) 363 Gross Profit $1,646 $40 $2 $3 $1 $1,694 $1,768 $40 $2 $6 $1 $1,818 Gross Margin 82% 84% 81% 83% Research and Development 474 (114) (7) - (2) 352 519 (118) (7) - (2) 393 Sales and Marketing 691 (84) (4) - (2) 599 719 (83) (4) - (2) 629 General and Administrative 217 (61) (2) - (4) 151 233 (61) (2) - (16) 154 Amortization of other intangibles - - - - - - 1 - - (1) - - Impairment of long - lived assets 19 - - - (19) - 19 - - - (19) - Income from Operations 1 $245 $300 $15 $4 28 $592 $277 $303 $15 $7 $40 $642 Operating Margin 12% 29% 13% 29%
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Non - GAAP income from operations reconciliation 1 34 FY25 ($ in millions) GAAP Stock - Based Comp. Employer Payroll Tax on Employee Stock trans. Amort of Intangibles Acquisition - related, Restructuring & Other Non - GAAP Cost of Revenues 320 (37) (2) (13) - 268 Gross Profit $1,378 $37 $2 $13 - $1,431 Gross Margin 81% 84% Research and Development 385 (101) (7) - - 277 Sales and Marketing 606 (77) (4) - - 524 General and Administrative 195 (57) (2) - - 137 Amortization of other intangibles 14 - - (14) - - Impairment of long - lived assets - - - - - - Income from Operations 1 $179 $272 $15 $27 - $494 Operating Margin 11% 29% 1. Values have been rounded and may not add up precisely to the totals .
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Adjusted FCF reconciliation 1 35 1. Values have been rounded and may not add up precisely to the totals . ($ in millions) FY25 FY26 Q2 - 27 TTM Adjusted Free Cash Flow Net Cash Provided by Operating Activities $459 $562 $607 PP&E (26) (32) (29) Capitalized software additions (3) - - Cash paid for acquisition - related, restructuring, and other costs 1 2 14 Total Adjusted FCF $432 $532 $593 Adjusted FCF % of Revenue 25% 26% 27% Total Adjusted FCF $432 $532 $593 Cash paid for tax 118 118 123 Total Pre - tax Adjusted FCF $550 $649 $716 Pre - tax Adjusted FCF % of Revenue 32% 32% 33%